Sri Lanka Treasury issues Rs825bn guarantees in 2016

Finance-ministry

June 09, 2017 (LBO) – The Treasury Operations Department has issued treasury guarantees and sovereign guarantees of 824.73 billion rupees at the end of the 2016.

The Department, releasing a report, said out of 824.73 billion rupees, 42.31 percent of guarantees have been issued to the power and energy sector.

Ceylon Electricity Board and Ceylon Petroleum Corporation are among state-owned institutions that were guaranteed credit in the recent past.

As per the department, road development sector which represents Road Development Authority has used 19.44 percent of treasury guarantees.

Aviation sector, which mainly comprised of SriLankan Airlines and Mihin Lanka, has received 11.89 percent of all guarantees issued from the state.

The government is currently in the process of restructuring SriLankan Airlines and expects to offer an equity stake and management control of the company in order to continue and strengthen the operations of the company.

The government has also provided financing support to both SriLankan Airlines and Mihin Lanka through Letters of Comfort during 2016 and early 2017.

Water supply sector has been issued 12.88 percent of treasury guarantees while trade and commercial sector has been used 7.67 percent.

Construction sector obtained 5.2 percent of these guarantees and banking sector received the least amount with only 0.61 percent.

The Department has issued treasury guarantees of 593.01 billion rupees at the end of the 2015. Out of that, 50.11 percent guarantees have been issued to the power and energy sector.

Treasury Operations Department issues treasury and sovereign guarantees to public enterprises when these institutions seek collaterals to be submitted for obtaining local and foreign loan facilities from financial institutions.

The issue of guarantees is however subject to relevant cabinet approvals and within the provisions of the Fiscal Management (Responsibility) Act.